The Act provides for cash awards to federal laboratory personnel for activities facilitating scientific or technological advancements which have either commercial value or contribute to the mission of the laboratory and for the transfer of technology leading to commercialization. As an additional incentive, federal employees responsible for an invention are to receive at least 15% of royalties generated by the licensing of the patent associated with their work. The agencies may establish their own royalty-sharing programs within certain guidelines. If the government has the right to an invention but chooses not to patent, the inventor, either as a current or former federal employee, can obtain title subject to the government retaining a nonexclusive, nontransferable, irrevocable, paid-uplicense to practice, or have practiced, the invention for its own needs.

The Act also gives all companies (not just small businesses, universities, and nonprofits) the right to retain title to inventions resulting from research performed under cooperative R&D agreements with government laboratories. If this occurs, the federal government retains a royalty-free license to use these patents. In addition, the Act states that the government agencies may retain a portion of royalty income rather than returning it to the Treasury. After payment of the prescribed amount to the inventor, the agencies must transfer the balance of the total to their government-operated laboratories, with the major portion distributed to the laboratory where the invention was made. The laboratory may keep all royalties up to 5% of their annual budget plus 25% of funds in excess of the 5% limit. The remaining 75% of the excess returns to the Treasury. Funds retained by the laboratory are to be used for expenses incurred in the administration and licensing of inventions; to reward laboratory personnel; to provide for personnel exchanges between laboratories; for education and training consistent with the laboratories’ and agencies’ missions; or for additional transfer.